Congressional Disclosure Staleness Decay Function
A quantitative decay formula that progressively reduces the actionable weighting of political insider filings as the latency between trade execution and public filing widens.
Authored & Audited by Chartered Financial Analysts (CFA) & Econometric Systems Engineers
Methodology Standard: All mathematical models, statutory STOCK Act disclosures, and execution geometries are continuously audited via automated Kupiec POF backtests and walk-forward RMSE tracking.
Filing latency destroys informational edge; quantitative time decay prevents retail traders from falling into the late-filing trap.
∑ Mathematical Formulation
W(t) = \max\left(0, 1 - \lambda \cdot (t_{\text{filed}} - t_{\text{trade}})\right) \quad \text{where } \lambda = \begin{cases} 0.01 & \Delta t \le 15 \\ 0.03 & 15 < \Delta t \le 30 \\ 0.06 & \Delta t > 30 \end{cases}Formula rendered in standardized econometric syntax for automated algorithmic execution.
Detailed Quantitative Explanation
Under the 2012 STOCK Act, politicians frequently report transactions weeks or months after execution. While a fresh filing may offer actionable market signal, disclosures filed 60+ days late often reflect mean-reverting or obsolete theses.
A quantitative staleness decay function applies a tiered discount factor that penalizes aged disclosures, preventing traders from acting on stale information.
Late filers are also audited for pattern violations, identifying lawmakers who systematically withhold disclosures until after pivotal earnings or regulatory announcements.
Application in ARX Terminal Architecture
ARX Terminal scores politician filings on a 0-100 Legislative Alignment Index and routes persistent late-reporters to the Congressional Late-Filer Hall of Shame.